GRAPH Papers® Commercial Diligence Best Practices

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048

By Nature, it’s the Channel (and a Leading Value Gen Lever)

By Mark Stein

The Target Co. is playing in a great space (e.g., strong tailwinds, right segment(s), etc.), has product(s) that attract valuable customers, the diligence indicates that the product line is differentiated, and the management team is presenting a very good, if not great, growth case. Unit economics are strong, and the IC can reasonably conclude that this might be a great opportunity. A nice find…
047

A New Class of Buyers - The Graduation of the Wise Industrial Buyer

By Jeff Merkle

As any homeowner knows, the demographics of the “trades” are changing, with an older generation of master tradespeople retiring. Consumers experience this as a lack of qualified service providers. As investors, there is another aspect to this trend that is more important to track – it represents a quiet changing of the guard among industrial customers.
046

How to Diligence the Risks of SaaS Scope Creep

By Hailey Messenger, Kerri Evans

GRAPH has diligenced many SaaS companies, and as we all witness there is a particular trend towards software companies seeking to build a “complete platform” stemming from an original best-in-breed point solution. In the quest to grow revenues, increase stickiness, drive value, and attract investment, companies are expanding their feature-sets. This scope-creep poses a very real risk of…
045

COVID-19: How to Prepare a B2(B2)C Business for the ‘New Normal’

By Ania Camilla Dulnik

COVID-19 has, in just a few months, shaken and radically disrupted governments, economies and societies alike (even the publication of our GRAPH Papers was disrupted – but we are glad to be back at it).
044

Credit in the time of COVID

By Jeff Merkle

Any statement on the level of disruption that 2020 has served up risks being an understatement. In addition to reconsidering personal lives and routines, many investors have been forced to rethink world views on risk and downside – a subject we’ve been spending immense time on over these past 6 months. While GRAPH prides itself on thinking creatively about value gen opportunities for new…
043

Pricing Journeys

By Jeff Merkle

The origins of this GRAPH Papers® article are in recent client requests: with deal prices necessitating robust value creation plans, clients have been continually driving projects around EBITDA growth. As commercial specialists, we think about growing the top line as four factors:
042

Integrated Offerings will More Easily Provide Greater Returns than the Cross-Sell Opportunity

By Mark Stein

Many commercial diligence exercises and value gen plans based on platforms and add-ons (a plurality these days) call for testing customer interest in, and potential for, the “cross sale.” While cross-sale opportunities have value gen potential, I have seen scant evidence that even the better ones produce much more than modest returns and valuation yield - i.e., maybe an increase in earnings,…
041

Winning in the Swing States – Commercial Due Diligence Lessons from Political Strategy

By James Tetherton

2024 will see national elections in both the US and the UK.* In both cases, the election will be won and lost in a handful of key marginal seats (or “swing states,” for US readers) - constituencies where the winning margin at the last election was less than 5% of the vote.
040

Assessing Price Sensitivity

By Mike Rose

Price sensitivity is a tricky subject to interpret correctly – doubly so in the tight timeframes common to current diligence windows. I’ve seen a lot of consulting reports that I believe misinterpret price sensitivity – either overstating or understating price in a ranking of decision makers’ Drivers of Choice. The importance of price in decision making is a critical question in any…
039

Understanding the Market Share Equation in Diligence and in Value Gen. Exercises

By Jeff Merkle

I’ve been reflecting on Mark's recent article about how to better capitalize on brand equity – and particularly about those situations where you can exploit untapped brand equity. Mark promotes a winning investment formula of investing in cases where “RBE > RMS,” i.e., a company whose Relative Brand Equity is greater than its Relative Market Share. These situations are sadly not…

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